The Settlement Alliance

Everything You Need to Know About QSF Administration

Everything You Need to Know About QSF Administration

Dec 8, 2016

When there are thousands of claimants involved in a case, it can be a challenge to manage the settlement proceeds. A Qualified Settlement Fund (QSF) is an account that holds the settlement proceeds, providing both the plaintiffs and the defendant with valuable benefits. Here is a summary of the basics that you should know about QSFs and how they are administered:

How does a Qualified Settlement Fund work?

Per IRC §468B, instead of the defendant paying the settlement proceeds directly to the plaintiffs, the defendant may place the proceeds into a Qualified Settlement Fund. Then, depending on what each plaintiff decides and how much of the settlement is allocated to each plaintiff, the funds are disbursed by the QSF administrator in the form of lump sums, funding of structured settlement annuities, funding of special needs trusts, or certain other options.

What exactly does a QSF administrator do?

While the extent of services provided can vary from administrator to administrator (which is why you should seek out an experienced one who provides the most comprehensive services available), there are a certain set of responsibilities that you can expect across the board, including:

  • Preparation of all motions, court orders, and documents needed to establish and administer the fund
  • Generating closing statements
  • Disbursement of all payments, including the funding of special needs trusts and structured settlements
  • Disbursement of attorney fees and expense reimbursements
  • Managing lien payments
  • Providing fraud protection and check validity verification
  • Providing account reconciliation, accounting, and reporting
  • Preparation of tax return filings and 1099 issuance

More experienced qualified settlement fund administrators also offer additional services—The Settlement Alliance, for example, offers an onsite call center staffed with government benefit counselors to answer plaintiffs’ questions about their settlements.

How does a Qualified Settlement Fund benefit plaintiffs?

When the defendant pays money directly to the plaintiffs, it’s generally on a timetable that doesn’t take into account the plaintiffs’ needs. The QSF offers what the plaintiffs need most—TIME. By placing the proceeds in a QSF, the plaintiffs and their attorneys can avoid constructive receipt and have time to properly allocate proceeds among plaintiffs (and address any allocation questions), resolve liens and subrogation claims, analyze and preserve government benefits, fund Medicare Set-Asides, underwrite structured settlement annuities, calculate tax liabilities, address probate and bankruptcy issues, and establish special needs trust, in addition to a number of other settlement-related matters.

Why do defendants like QSFs?

After the QSF is funded, the defendant is then fully released of all claims. That means the defendant doesn’t have to wait for liens to be resolved and other documentation to be completed. The defendant is also then able to take an immediate tax deduction, rather than having to wait for every individual payment to be made to the plaintiffs.

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The Settlement Alliance is one of the nation’s most experienced qualified settlement fund administrators. For a full list of our QSF Administration services, visit our website. For more information, contact us at info@settlement-alliance.com or 800-464-2500.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • Liberty Life Assurance Company of Boston
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential